Future Prosperity of Nations

There are two ways that determine future prosperity of the world and emerging countries: Black vision

and brighter vision.According to Prahald and Hammond, which scenario will prevail in the future is

determined by willingness of multinational companies to enter and invest in the poorest markets of the

world. By this way, MNCs will stimulate trade and contribute to development of economic pyramid from

the buttom improving the lives of many people and causing a more stable economic enviroment.This

initiative does not require MNCs to give up from their self interests, there are enormous business

benefits to be gained by entering emerging markets.

There are some considerations that prevent MNCs to invest in developing markets or regions in which

people are at the buttom of the economic pyramid (BOP). First of all, companies assume that people

with low income have little to spend on goods and services since they have difficulty in paying for food

and shelter.While individual incomes may be low ,the aggregate buying power of poor communities is

actually quite large.Moreover, the poor often buy ‘luxury’ items as in the case of Mumbai shantytown of

Dharavi.Secondly, it is believed that there are various barriers to commerce -corruption,illiteracy,

inadequate infrastructure, currency fluctuations , bureaucratic red tape- that make it impossible to do

business profitably in these regions. In contrast to what is believed, the barriers to commerce-although

real- are much lower.Moreover, there have been political reforms-growing openness to investment, the

development of low cost wireless communication networks- that mitigate commercial barriers.

 New lowcost information technology and communication networks together with other supplementary r

eforms also mitigate critical distribution barriers to access rural regions which means millions of potenti

al new customers. The final misconception is that the goods sold there are incredibly cheap and, hence,

there...